New state rules for low-emission vehicle rebates

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The back license plate area displays a “zero emissions” sign on a Tesla Model S P90D on display at the new Tesla store in the Stanford Shopping Center in Palo Alto, Calif., on Friday, Nov. 6, 2015. (LiPo Ching/Bay Area News Group)

After handing out close to $300 million in rebates for purchasers of low- and zero-emission vehicles, state regulators spotted a nettlesome trend — much of the money ended up in the pockets of upper middle class and wealthy homeowners.

Did the state really need to subsidize owners of gleaming new Volts and Teslas and BMW i3s?

“If somebody is going to buy a top-line Tesla,” said Dave Clegern, spokesman for the California Air Resources Board, “they may not need the help.”

Late last month, new rules capped income levels for the Clean Vehicle Rebate Project, or CVRP. The program offers a range of rebates, including $1,500 for hybrid vehicles, $2,500 for electric cars and $5,000 for hydrogen cars. The program also took steps to encourage more low and moderate income families to join the clean vehicle fleet.

The rules took effect March 29 and eliminate rebates for consumers with annual incomes above $250,000 for single taxpayers and $500,000 for joint filing families. Low- and moderate-income buyers, defined as making less than three times the federal poverty level or $72,900 for a family of four, are eligible for an additional $1,500 rebate toward the purchase of a new low or zero emission vehicle.

Clean vehicle purchasers are also eligible for federal tax credits, which can lower the cost of a new vehicle by as much as $7,500.

The state established the rebate project in 2010 to encourage clean vehicle ownership, with a goal of having 1.5 million zero-emission vehicles on California roads by 2025. The program is funded by bonds and proceeds from the cap-and-trade program, Clegern said.

Last year, a study commissioned by the Air Resources Board found that the typical rebate went to a college-educated, white male who owned a home and had an annual income of between $50,000 and $200,000.

Just 6 percent of the rebate dollars went to residents in poor communities, according to the report. The state failed to reach its modest, 10 percent goal to reach neighborhoods defined as disadvantaged communities.

Clegern said the changes were designed to better distribute the rebate money. “It’s still reasonably generous,” he said. “Our goal is still to get these vehicles on the road.”

The debate continues among clean vehicle advocates on how to encourage growth in the industry.

Eileen Tutt, executive director of the California Electric Transportation Coalition, said the rebate program has been “incredibly effective.” The nonprofit encourages growing the fleet of electric vehicles.

The organization opposed the caps, believing it could discourage prospective buyers who did not want to share personal income information with the state, Tutt said. CalETC felt it was too early for restrictions that made it harder to qualify for the rebates, she said. But she hopes the additional rebate for lower-income families will expand the market.

Tutt said two pilot programs — in San Joaquin Valley and Southern California — encourage clean transportation by allowing moderate-income residents to combine rebates to put toward the purchase of a used, low-emission vehicle. “It’s important to try it,” she said.

The fast-growing clean transportation sector, which includes hybrid, electric and natural gas vehicles, added 7,000 new jobs in California last year, a 65 percent increase over the previous year, according to a study by industry group Advanced Energy Economy.

More than half of the people employed in the sector work on electric and hybrid vehicles. The industry got another boost this month from Palo Alto-based Tesla Motors, which booked more than 300,000 reservations for its lower-priced sedan in a week.

Steve Chadima, senior vice president for external affairs at Advanced Energy Economy, said the rebate program has encouraged clean vehicle purchases, much like the subsidies that helped build the market for solar panels a decade ago.

The price of electric vehicles will decline as more are produced, he said. “Is the program working?” Chadima asked. “The answer is mostly, ‘yes.’ “

Louis Hansen covers housing issues for the Bay Area News Group and is based at The Mercury News. He's won national awards for his investigations and feature stories. Prior to joining the organization, he was an investigative reporter at The Virginian-Pilot, where he covered state government, the military and criminal justice.